Ashcroft Deal Brings Scrutiny in Justice Dept.

WASHINGTON — When the top federal prosecutor in New Jersey needed to find an outside lawyer to monitor a large corporation willing to settle criminal charges out of court last fall, he turned to former Attorney General John Ashcroft, his onetime boss. With no public notice and no bidding, the company awarded Mr. Ashcroft an 18-month contract worth $28 million to $52 million.

That contract, which Justice Department officials in Washington learned about only several weeks ago, has prompted an internal inquiry into the department’s procedures for selecting outside monitors to police settlements with large companies.

The contract between Mr. Ashcroft’s consulting firm, the Ashcroft Group, and Zimmer Holdings, a medical supply company in Indiana, has also drawn the attention of Congressional investigators.

The New Jersey prosecutor, United States Attorney Christopher J. Christie, directed similar monitoring contracts last year to two other former Justice Department colleagues from the Bush administration, as well as to a former Republican state attorney general in New Jersey.

Officials said that while there had been no accusations of wrongdoing on the part of Mr. Christie or Mr. Ashcroft, aides to Attorney General Michael B. Mukasey were concerned about the appearance of favoritism.

Mr. Mukasey, a former federal judge who was sworn in as attorney general in November, has vowed to remove political considerations from decision-making at the department in the wake of a series of scandals under his predecessor, Alberto R. Gonzales.

Mr. Ashcroft was awarded the contract last fall at the direction of Mr. Christie as part of his office’s settlement of criminal accusations against Zimmer Holdings and four smaller firms accused of paying kickbacks to doctors.

A spokesman for Mr. Ashcroft said that the Ashcroft Group had not lobbied for the contract but was pleased by the referral.

The disclosure of the monitoring agreement, in which Mr. Ashcroft’s fees are paid directly by Zimmer, prompted Democratic lawmakers from New Jersey to question if the contract was new evidence of political favoritism in the Bush administration’s long-embattled Justice Department.

Justice Department officials said the internal inquiry by the Criminal Division began several weeks ago with no public announcement.

Department officials said the review was expected to result this year in formal guidelines to prevent the appearance of conflicts in the choice of monitors to oversee out-of-court settlements reached between federal prosecutors and companies accused of wrongdoing.

In the Bush administration, federal prosecutors have increasingly relied on out-of-court settlements with large corporations in criminal investigations that in the past might have resulted in indictments and trials. The settlements often call for outside lawyers to be retained by the companies to monitor the agreements. The contracts call for the lawyers to monitor the company’s compliance with the settlements through financial audits and other types of internal investigations.

A new study by two Texas lawyers, Lawrence D. Finder and Ryan D. McConnell, found that the number of so-called deferred-prosecution or nonprosecution agreements between the department and large companies grew to 35 last year from 5 in 2003.

Often, the names of corporate monitors are not made public. The internal inquiry started after Zimmer Holdings revealed in filings with the Securities and Exchange Commission in late October that it had hired Mr. Ashcroft’s consulting firm, based in Washington, to monitor its settlement of criminal charges based on accusations of kickbacks to doctors involving the company’s knee and hip implants.

The firm said Mr. Christie had directed it to hire Mr. Ashcroft. Mr. Christie has acknowledged that he chose Mr. Ashcroft for the assignment. The disclosures in Zimmer’s filings about Mr. Ashcroft were first reported several weeks ago by The Star-Ledger of Newark and other New Jersey news organizations.

Mr. Christie directed similar contracts in settlements with other medical-supply companies to two other former Justice Department colleagues — David N. Kelley, the former United States attorney in Manhattan, and Debra Wong Yang, his counterpart in Los Angeles — and to David Samson, the former Republican attorney general in New Jersey.

In a telephone interview on Wednesday, Mr. Christie said he chose Mr. Ashcroft and the others for the monitoring assignments because they had impeccable legal credentials and he knew and trusted them.

“It’s really important that the working relationship between this office and the monitors is very, very close,” he said. “I can’t tell you how much work we do with these monitors.” He said he had selected Mr. Ashcroft to work with Zimmer, the largest of five companies in the criminal investigation, because “I knew he was somebody who understands these issues and would be taken seriously by the company as an authority figure.”

Mr. Christie has disputed accusations raised by Democratic lawmakers in New Jersey that it was a conflict of interest for him to direct large, no-bid contracts to former colleagues and friends, but he has referred those questions to the Justice Department in Washington.

Department officials said they had no formal comment but noted that the monitoring agreements were not given only to Republicans and that Mr. Christie’s recommendations of outside monitors in other large corporate investigations had been praised.

Although he was a prosecutor in the Bush administration, Mr. Kelley has registered as a Democrat in the past. Mr. Kelley, who has done legal work for The New York Times, did not respond to e-mail messages on Wednesday. Mr. Samson and Ms. Yang did not return phone calls.

The dollar value of the contracts obtained by Mr. Kelley, Ms. Yang and Mr. Samson is unclear, since the medical-supply companies they are monitoring have not revealed those details, suggesting that they are smaller than Mr. Ashcroft’s.

Under the settlements with the Justice Department, the companies negotiate the fees with the monitors themselves, a situation legal scholars say has the potential for abuse because companies might be overly generous to encourage leniency.

Department officials said that there were few internal guidelines for hiring independent monitors and that Mr. Christie was not required to seek approval from the Justice Department to name Mr. Ashcroft and the others and had not done so.

A spokesman for Mr. Ashcroft’s firm, Mark Corallo, said that Mr. Ashcroft was an obvious choice as a monitor.

“I know John Ashcroft, I know his capabilities,” Mr. Corallo said. “No matter what people think of his politics, he ran an unbelievably efficient operation at Justice as a manager. He understands the law. He understands how to manage an enormous organization.”

He said that Mr. Ashcroft knew nothing about the assignment until the possibility was raised by Mr. Christie, who was nominated for his position in 2001, the year Mr. Ashcroft was sworn in as attorney general. Mr. Christie had been a lawyer in private practice and a Republican fund-raiser in New Jersey.

Mr. Corallo said that Mr. Ashcroft’s firm had hired more than 30 employees and outside advisers, including accountants and lawyers, to oversee the monitoring contract and that Mr. Ashcroft had traveled to Indiana several times for the assignment.

“It’s taken a large personal commitment from him,” Mr. Corallo said, adding, “In coming months, people will realize that Chris Christie did exactly the right thing in choosing these folks to be monitors.”

In its filing with the Securities and Exchange Commission, Zimmer said it had agreed to pay the Ashcroft firm a monthly fee of $750,000, and to reimburse it for expenses that were expected to total $150,000 to $250,000 a month.

Correction: January 14, 2008

A front-page article on Thursday about a contract awarded to the consulting firm of former Attorney General John Ashcroft misstated the year that Mr. Ashcroft was sworn in. It was 2001, not 2002. The article also misstated the year of the selection of Christopher J. Christie, the United States attorney in New Jersey, who directed the contract to Mr. Ashcroft’s firm. Mr. Christie was nominated on Dec. 7, 2001, not in 2002. (He was sworn in on Jan. 17, 2002.)

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